Campari Slides as Third-Quarter Sales Miss Estimates
(Corrects spelling of Sagatiba brand in third paragraph.)
Davide Campari-Milano SpA (CPR), the maker of Wild Turkey bourbon, slid the most in three years in Milan trading after reporting slower sales growth than some analysts had estimated because of weakness in Italy.
The shares fell as much as 8.3 percent and traded 7.2 percent lower at 5.33 euros at 1:11 p.m. local time, giving the company a market value of 3.1 billion euros ($4.2 billion). Revenue, excluding the effects of acquisitions and currency shifts, rose 7.3 percent in the third quarter, slowing from a 12 percent pace in the first half, the company said today in a statement. Melissa Earlam, an analyst at UBS AG in London, had estimated growth on the same basis of 12.5 percent.
Sales in the company’s home market of Italy, which represents 32 percent of sales, rose 2.7 percent, weighing on total revenue growth. Campari, based in Milan, said sales improvements were driven by Aperol and its Campari brand in markets including Germany. The company said in August it bought Sagatiba, a Brazilian cachaca brand, as it pushes further into so-called emerging markets, seeking faster sales growth as the European and U.S. economies stagnate.
Campari has “further heightened our disciplined approach to working capital management” in light of the macroeconomic risks linked to conditions in financial markets, Chief Executive Officer Bob Kunze-Concewitz said. “For the remainder of the year, we expect our key brand and market combinations to continue performing positively.”
Mario Monti, former European Union competition commissioner, was asked to become Italy’s prime minister yesterday after the European debt crisis led to the unraveling of a coalition led by Silvio Berlusconi. Italy’s 10-year bond yield has surged to more than 7 percent on concern about the country’s public finances.
The company said today that it would invest to strengthen its distribution, particularly in the “high potential” Russian market.
Campari’s nine-month net revenue was 889.2 million euros. Earnings before interest and tax rose almost 13 percent to 206.2 million euros.
Sales in the U.S., the world’s biggest spirits market, rose 3 percent as consumers bought Skyy vodka infusions and Wild Turkey. So-called organic sales rose 8.4 percent in Brazil, helping push growth in the Americas, representing 34 percent of revenue, to 9.6 percent. Sales in Europe, excluding Italy, rose 17.2 percent on an organic basis as Russian, Austrian and German consumers bought more products.
Aperol, which is now the largest brand for Campari by sales value, saw sales growth of 43 percent, excluding currency effects, as the company introduced it to markets outside Italy.
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